Last week was a busy week for housing data. On one hand, three released indicators – builder sentiment, residential construction activity and existing home sales, came above expectation. On the other hand, new home sales continued its decline in July, mortgage applications are down 11% year-over-year, and pending sales slipped 1.1% in June, indicating challenges still remain.
In the July FOMC meeting minutes released last week, there was a signal that economy may have been better than previously expected and that “it might become appropriate to begin removing monetary policy accommodation sooner than currently anticipated.” In the meantime, after a jump of inflation in June (0.3%), July CPI inflation was 0.1% month-over-month, according to report released last week. The slowdown of inflation may reduce the pressure of Fed to raise interest rate.
Globally, the picture has not changed much during the past several quarters, with a weak growth in the Eurozone and slowing economic development in the developing world. As the Eurozone is the largest market for Chinese export, the recent Chinese economic data may have been reflecting this weakness.